What Interest Will My Account Earn?
Our fixed annuities have a guaranteed minimum interest rate. This guaranteed minimum interest rate will always be within a range of 1% to 3%. In addition to the guaranteed rate, the Company may, at its discretion, declare a higher current rate. Current declared rates are reviewed monthly and adjusted periodically based on overall financial results of company operations.

For our current declared rate, please ask your representative or contact us at 800-662-1106.

How Will I Know the Value of My Before-Tax Annuity?
The value of your annuity account is always equal to 100% of your payments plus credited interest, less premium taxes, if any. Each fall, you will automatically receive a statement of your annuity account for the year ending August 31. You may also obtain your account values by telephone at any time by calling our toll-free automated service at 1-800-662-1106.

Do I Have Control Over My Payments?
Yes. The agreement to contribute is between you and your employer and may be changed by mutual agreement at any time. You may stop, start, increase or decrease your payments at any time without penalty by American Fidelity.

Is There A Limit on the Amount I Can Pay Into My Before-Tax-Annuity Account?
Tax law limits the maximum payment that can be excluded from your taxable income to $15,000 for 2006. This amount may be more, depending on your past years of service with your employer, amounts previously contributed, and other employer contributions to retirement plans. Your American Fidelity representative can assist you in calculating your maximum contribution amount.

Is There A Minimum Payment?
The minimum payment to the Before-Tax Annuity is $25.00, unless we agree to accept less.

Can I Borrow on My Account?
Yes. Once your account balance is $2,000, you will be eligible for an annuity loan. An annuity loan can help you meet pressing financial needs while avoiding both the income tax and the penalty tax, if guidelines are followed carefully.

Are There Withdrawal Provisions?
Since no income tax has been paid on the payments to your account, you would need to report your withdrawals as income on your income tax return. Unless your withdrawal is made after age 59½ , age 55 and separation from service, or on account of your death, disability, or medical expenses meeting certain conditions, a 10% penalty tax will also be due on the amount withdrawn.

• you attain age 59½
• your death or total disability
• separation from service
• severe financial hardship

What Are My Options at Retirement?

1. You may elect to take a lump sum. You will probably receive a greater tax advantage if you elect a periodic payment option.
2. You may elect to receive monthly payments for life that terminate only at your death, no matter how long you live.
3. You may elect to receive a life annuity with 120 months certain. This option provides you with monthly payments for as long as you live. If, at your death, payments have been made for fewer than 120 months, you have the assurance that payments will be continued to your beneficiary for the remainder of the 120 months.
4. You may elect to receive a monthly income for a fixed period of years as allowed by the Internal Revenue Service. NOTE: Distribution must, in most cases, begin by age 70½ to avoid tax penalties imposed by the Internal Revenue Service.

What if I Die Before I Retire?
In the event that your death occurs prior to retirement, the contract provides that your beneficiary will receive the value of your account.

Will A Before-Tax Annuity Affect My Social Security?
Your contributions to Social Security and the benefits you received will not be affected by contributions to this plan according to current FICA laws.

Are There Other 403(b) Fixed Annuity Options Available?
Yes. If age 55 or younger, the High Interest Option may be chosen to add to your Before-Tax Annuity. Choosing this option will allow you to earn a higher rate of interest than you would normally receive. Ask your American Fidelity representative about the current rate for this option.

What Are the Benefits of the High Interest Option?

• Pays a minimum of ½% greater interest rate than the current declared rate on the base policy.
• No sales charges or annual fees. Your account balance equals your contributions plus interest credited.

Are There Surrender Charges for Withdrawals?
Under the High Interest Option, withdrawals are permitted without charge in the following situations:

• Full withdrawal may be made to purchase an annuity payment option for life or for a period certain of at least 10 years.
• Full withdrawal may be made for payment to a beneficiary at the death of the participant.
• Full withdrawal may be made for payment to a participant who has been disabled one year or more.
• You may make an annual partial withdrawal of up to 10% of your account balance at the beginning of the current plan year without a penalty.
• If none of the provisions above apply, there is a surrender penalty of 6% during the first 6 years and 4% during the next 4 years. However, the participant is guaranteed return of the principal amount.